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The bonds had absolutely nothing to do with “economic recovery.” They were floated largely to refinance short-term loans coming due without cash on hand to pay them.

In personal finance terms, the state was taking out a long-term mortgage to pay off unsustainable credit card debt – stemming from several years of fiscal irresponsibility under Schwarzenegger’s successor, Gray Davis, who had been ousted by voters for his ineptitude.

State Treasurer John Chiang and Michael Cohen, the state budget director, staged a ceremony Wednesday to announce that the last of the bonds, including more than $4 billion in interest, had been paid off.

Chiang, who may run for governor in 2018, and Cohen made the obligatory noises about fiscal responsibility. “Wall Street should not be the budget reserve for the state of California,” Chiang said.

Retiring the bonds also ends the “triple-flip” that shifted sales and property taxes among the state, school districts and counties, assuring bond buyers that a dedicated stream of sales taxes would repay them.

But little was said of another measure that accompanied the bonds on the 2004 ballot – one that would, Schwarzenegger said at the time, “cut up the credit cards.”

There was broad agreement in the Capitol that the bonds were vital to stave off insolvency as those short-term “revenue anticipation notes” came due. But there was a face-to-face confrontation between Schwarzenegger and Democratic legislators over a tough spending limit/reserve he also sought.

It was Schwarzenegger’s first test, scarcely a month after succeeding Davis. Democrats and public employee unions didn’t want a constitutional limit on spending, and as the deadline for placing measures on the ballot approached, it became a question of who would blink first.

Schwarzenegger, the action movie star who had pledged to get tough with a profligate Legislature, backed down and agreed to a measure that professed to curb spending but had virtually no practical effect.

Voters approved, therefore, two ballot measures, Propositions 57 and 58, that were monuments to misleading symbolism. Furthermore, in allowing himself to be rolled by the Legislature, Schwarzenegger lost his golden opportunity to truly reform California’s tortured finances.

Seven years later, he left the state in worse fiscal condition than the one he inherited from Davis and it was up to Jerry Brown to clean up the mess. Among his fixes is Proposition 2, the 2014 measure that pumps up Schwarzenegger’s wimpy 2004 reserve measure.

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